Global Markets Overview 05/09/2011
US Markets
U.S. stocks rose Friday as investors were encouraged by a bigger than expected increase in monthly nonfarm payrolls, but worries over Greece limited the gains.
The Dow Jones Industrial Average closed up 54.57 points, or 0.43%, to 12638.74. Kraft Foods was the measure's best performer with a jump of 69 cents, or 2.1%, to $34.08, after the packaged-foods company's first-quarter sales and profit topped analysts' estimates.
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The Nasdaq Composite rose 12.84, or 0.46%, to 2827.56. The Standard & Poor's 500 index added 5.10, or 0.38%, to 1340.20, with all its sectors in positive territory. All three measures fell on the week, snapping a two week winning streak. The Dow fell 1.34% this week while the S&P 500 shed 1.72% and the Nasdaq Composite lost 1.60%.
The week's declines coincided with a plunge in commodities, sparked by worries about overheated markets. The gains Friday, the one year anniversary of the flash crash, came as investors got some relief from government data showing nonfarm payrolls rose by 244,000 last month. The increase topped expectations for a rise of 185,000 jobs while the private sector posted the strongest employment gain in five years. Still, the unemployment rate, which is obtained from a separate household survey, rose to 9% last month from 8.8% in March.
An online report from German magazine Der Spiegel saying Greece has raised the possibility of leaving the currency zone prompted U.S. stocks to pare back in the afternoon from their highs of the day. But the market stayed in positive territory as senior Greek officials quickly denied the report and investors expressed doubts as to the validity of the report. Finance chiefs from the most important euro-zone nations discussed Greece's problems and other issues, including Portugal's imminent aid package at informal talks in Luxembourg Friday.
Among the topics that were discussed at the meeting, people familiar with the matter said, were Greece's struggle to close its budget deficit amid weak tax revenue and a shrinking economy. Greek Finance Minister George Papaconstantinou, who attended the meeting, told his counterparts from Germany, France, Italy and Spain that his government may need until 2016, rather than 2014 as previously agreed, to cut its deficit to 3% of gross domestic product, people familiar with the matter said.
European Markets
European markets snapped a three-session losing streak to end higher Friday as gains in the banking sector and better than expected U.S. jobs data for April sparked a rally. The Stoxx Europe 600 index closed up 1.3% at 281.33, paring losses for the week to 0.9%. A further boost came courtesy of the U.S., where data showed the economy added 244,000 jobs in April, the biggest increase in almost a year. There was encouraging economic news in Europe as well when German data showed March industrial production rose a better than expected 0.7%.
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Banks drove much of the gains for Europe, led by Royal Bank of Scotland Group PLC, which rose 5.6%. The bank reported a first-quarter net loss that more than doubled, but impairments on bad loans dropped 27% from a year earlier. In Germany, shares of Commerzbank AG rose 1.7%. UBS AG shares gained 1.6% in Zurich, while UniCredit SpA advanced 1.9% in Milan. French banks also climbed, with Credit Agricole SA gaining 2.2% and BNP Paribas SA adding 0.8%. In London the FTSE 100 index closed up 1% at 5,976.77.
Shares of oil giant BP PLC rallied 3.1%. The firm looks closer to a solution for its stalled deal with Russia's Rosneft following an arbitration panel decision. Germany's DAX 30 index jumped 1.6% to 7,492.25, led by an 8% rally for shares of ThyssenKrupp AG. The steelmaker announced a EUR10 billion divestment program with plans to spin off its stainless-steel group and sell automotive assets. The French CAC 40 index added 1.3% to 4,058.01.
Asian Stocks
Asian stocks traded mostly lower Friday as commodity related shares were battered by falling crude-oil and metals prices in jittery markets ahead of U.S. nonfarm payrolls data for April. Hong Kong's Hang Seng Index fell 0.4% to 23,159.14, China's Shanghai Composite dropped 0.3% to 2,863.89, and Taiwan's Taiex shed 0.5% to 8,977.23. Big losses were suffered by Japanese and South Korean stocks as those markets reopened after holidays, with the Nikkei Stock Average falling 1.5% to 9,859.20 in Tokyo and the Kospi losing 1.5% to 2,147.45 in Seoul.
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India's Sensex rose 1.7% to 18,518.81 after a record nine-session losing streak. Several resource sector stocks took a beating, with Cnooc Ltd. falling 2.3% and gold miner Zhaojin Mining Industry Co. shedding 4.5% in Hong Kong, PetroChina Co. losing 2.2% in Shanghai, and Inpex Corp. tumbling 6.2% in Tokyo. Korea Zinc Co. finished 7.5% lower and Sterlite Industries India Ltd. gave up 1.2% in Mumbai. Airline stocks benefited from the lower oil prices, with Japan's All Nippon Airways Ltd. gaining 0.8%, Hong Kong's Cathay Pacific Airlines Ltd. climbing 3.2% and Korean Air Lines Co. advancing 1.6%..
Base Metals
LME copper closed only marginally higher on the London Metal Exchange Friday, despite staging an impressive comeback after better-than-expected U.S. payroll data lifted the metals from a commodity-wide slump. At the PM kerb close, LME three month copper traded up 0.1% at $8,819 a metric ton, comfortably above the day's five-month low of $8,657.50/ton.
The rest of the complex was mixed, with most other metals trading just slightly higher or lower on the day, with the exception of tin, which tends to see exaggerated price moves in either direction due to its illiquid market conditions. Tin closed 2.8% higher at $29,650/ton.
Crude oil futures capped an aggressive week-long selloff with a 2.6% decline to an eight week low, aided by further strength in the dollar. After the third-biggest dollar for dollar decline since futures trading began in 1983 took prices below $100 on Thursday, crude rallied above $102 a barrel after news of stronger than expected U.S. jobs growth in April. But the rally was short lived, as traders focused on a surprise rise in the unemployment rate, the first gain since November. Light, sweet crude oil for June delivery on the New York Mercantile Exchange dropped $2.62 to settle at $97.18 a barrel, matching the eight-week low of March 15.
The price fell $16.75 a barrel, or 14.7% in the week. That was the biggest weekly percentage drop since the week ended Dec. 19, 2008. June ICE Brent crude fell 1.5%, or $1.67, to $109.13 a barrel, the lowest price since March 15. Brent dropped $16.76, or 13.3% on the week, in the biggest percentage decline since the week ended Dec. 5, 2008.
The most actively traded gold contract, for June delivery, rose $10.20, or 0.7%, to settle at $1,491.60 a troy ounce on the Comex division of the New York Mercantile Exchange. The nearby May contract gained $10.30, or 0.7%, to $1,491.20. July silver sank 95.3 cents, or 2.8%, to settle at $35.287 a troy ounce while May silver declined 94.8 cents, or 2.8%, at $35.283.
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